Bluetooth is a short range wireless link, it can be used to connect your phone to a computer or PDA (so that the computer or PDA can use the phone as a modem, depending on your contract) or to a headset (so that you can use the wireless headset for hands-free calls, or if your phone and headset support it for wireless stereo so you can listen to music (called a2dp)).

The hands-free headset is a given, you buy one, pair it (press some buttons so they recognise each other and then enter a passcode on the phone so the headset knows you're kosher).

With a PC/PDA you can do the modem thing (but it's slow and expensive compared to using a wifi service or broadband), but you can also use the PC to write text messages, edit contacts, all that sort of stuff (you need software specific to your handset mind you).

HTH a bit